Claiming input VAT on a building from which a vendor will operate

Q: I would like
to know if a company that is registered for VAT can claim Input Vat on the
purchase of Fixed Property [Building], from which their company will operate.

A: Our guidance
assumes that the fixed property (goods as defined) was acquired by the vendor
(the company) wholly for the purpose of consumption, use or supply in the
course of making taxable supplies or partly so. "Goods” means corporeal movable
things, fixed property, any real right in any such thing or fixed property, and
electricity, but excluding money.

The tax can then be deducted, but remember there are special
rules in this regard. Section
16(3)(a)(iiA) of the Value-Added Tax Act provides that the vendor (accounting
for tax on the invoice basis) can only make a deduction of the input tax to the
extent that payment of any consideration which has the effect of reducing or
discharging any obligation relating to the purchase price of the property has
been made. This is because the provisions of section 9(3)(d) apply.

Disclaimer: Nothing in
this query and answer should be construed as constituting tax advice or a tax
opinion. An expert should be consulted for advice based on the facts and
circumstances of each transaction/case. Even though great care has been taken
to ensure the accuracy of the answer, SAIT do not accept any responsibility for
consequences of decisions taken based on this query and answer. It remains your
own responsibility to consult the relevant primary resources when taking a
decision.

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